A TOUGH summer for industrial firms was last night blamed for the economy's weakest quarter of growth since early last year.

Some of the North-East's core industries, including chemicals and other manufacturing were the hardest-hit by oil price rises, higher interest rates and weak demand from overseas customers.

The UK's gross domestic product (GDP) is estimated to have grown by 0.4 per cent in the three months to the end of September - down on the 0.9 per cent seen in the second quarter and short of City expectations. The year-on-year rate was three per cent, compared with 3.6 per cent reported in the second quarter.

The lacklustre quarterly performance reflected a 1.1 per cent drop in the volume of output in production industries as companies faced up to rising raw materials costs spurred on by oil price rises.

The latest figures, which can still be revised by the Office for National Statistics, led analysts to scale back forecasts for growth this year.

The GDP data signals the re-emergence of a two-tier economy in the UK as, while the manufacturing recovery showed signs of stalling, the consumer side remained resilient - as shown by above-trend growth in the service sector of 0.8 per cent.

Earlier this month, figures reported a 0.8 per cent decline in manufacturing output - the third in as many months.